2005 Regular Session
By: Representative Formby
AN ACT TO AMEND SECTION 83-55-7, MISSISSIPPI CODE OF 1972, TO PROVIDE THAT OUT-OF-STATE RISK RETENTION GROUPS SHALL BE SUBJECT TO TAXATION, AND ANY APPLICABLE FINES AND PENALTIES RELATED THERETO, ON THE SAME BASIS AS ELIGIBLE NONADMITTED INSURERS; TO AMEND SECTION 83-55-16, MISSISSIPPI CODE OF 1972, TO DELETE THE ANNUAL REGISTRATION FEE REQUIRED TO BE PAID BY RISK RETENTION GROUPS OR RISK PURCHASING GROUPS; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. Section 83-55-7, Mississippi Code of 1972, is amended as follows:
83-55-7. Risk retention groups chartered and licensed in states other than this state and seeking to do business as a risk retention group in this state shall comply with the laws of this state as follows:
(a) Notice of operations and designation of Commissioner as agent.
(i) Before offering insurance in this state, a risk retention group shall submit to the Commissioner:
1. A statement identifying the state or states in which the risk retention group is chartered and licensed as a liability insurance company, charter date, its principal place of business, and such other information, including information on its membership, as the Commissioner of this state may require to verify that the risk retention group is qualified under Section 83-55-3(k);
2. A copy of its plan of operations or feasibility study and revisions of such plan or study submitted to the state in which the risk retention group is chartered and licensed; provided, however, that the provision relating to the submission of a plan of operation or feasibility study shall not apply with respect to any line or classification of liability insurance which:
a. Was defined in the Product Liability Risk Retention Act of 1981 before October 27, 1986; and
b. Was offered before such date by any risk retention group which had been chartered and operating for not less than three (3) years before such date; and
(ii) The risk retention group shall submit a copy of any revision to its plan of operation or feasibility study required by Section 83-55-5(2) at the same time that such revision is submitted to the Commissioner of its chartering state.
(iii) A statement of registration, for which a filing fee shall be determined by the Commissioner, which designates the Commissioner as its agent for the purpose of receiving service of legal documents or process.
(b) Financial condition. Any risk retention group doing business in this state shall submit to the Commissioner:
(i) A copy of the group's financial statement submitted to the state in which the risk retention group is chartered and licensed which shall be certified by an independent public accountant and contain a statement of opinion on loss and loss adjustment expense reserves made by a member of the American Academy of Actuaries or a qualified loss reserve specialist (under criteria established by the National Association of Insurance Commissioners);
(ii) A copy of each examination of the risk retention group as certified by the Commissioner or public official conducting the examination;
(iii) Upon request by the Commissioner, a copy of any information or document pertaining to any outside audit performed with respect to the risk retention group; and
(iv) Such information as may be required to verify its continuing qualification as a risk retention group under Section 83-55-3(k).
(i) Each risk retention group shall be liable for the payment of premium taxes and taxes on premiums of direct business for risks resident or located within this state, and shall report to the Commissioner the net premiums written for risks resident or located within this state. Such risk retention group shall be subject to taxation, and any applicable fines and penalties related thereto, on the same basis as an eligible nonadmitted insurer.
(ii) To the extent licensed agents or brokers are utilized pursuant to Section 83-55-23, they shall report to the Commissioner the premiums for direct business for risks resident or located within this state which such licensees have placed with or on behalf of a risk retention group not chartered in this state.
(iii) To the extent that insurance agents or brokers are utilized pursuant to Section 83-55-23, such agent or broker shall keep a complete and separate record of all policies procured from each such risk retention group, which record shall be open to examination by the Commissioner, as provided in Section 83-5-65, Mississippi Code of 1972. These records shall, for each policy and each kind of insurance provided thereunder, include the following:
1. The limit of liability;
2. The time period covered;
3. The effective date;
4. The name of the risk retention group which issued the policy;
5. The gross premium charged; and
6. The amount of return premiums, if any.
(d) Deceptive, false or fraudulent practices. Any risk retention group shall comply with Sections 83-5-29 through 83-5-51, Mississippi Code of 1972, regarding deceptive, false or fraudulent acts or practices. However, if the Commissioner seeks an injunction regarding such conduct, the injunction must be obtained from a court of competent jurisdiction.
(e) Examination regarding financial condition. Any risk retention group must submit to an examination by the Commissioner to determine its financial condition if the Commissioner of the jurisdiction in which the group is chartered and licensed has not initiated an examination or does not initiate an examination within sixty (60) days after a request by the Commissioner of this state. Any such examination shall be coordinated to avoid unjustified repetition and conducted in an expeditious manner and in accordance with the NAIC's Examiner Handbook.
(f) Notice to Purchasers. Every application form for insurance from a risk retention group, and every policy (on its front and declaration pages) issued by a risk retention group, shall contain in ten-point type the following notice:
This policy is issued by your risk retention group. Your risk retention group may not be subject to all of the insurance laws and regulations of your state. State insurance insolvency guaranty funds are not available for your risk retention group.
(g) Prohibited acts regarding solicitation or sale. The following acts by a risk retention group are hereby prohibited:
(i) The solicitation or sale of insurance by a risk retention group to any person who is not eligible for membership in such group; and
(ii) The solicitation or sale of insurance by, or operation of, a risk retention group that is in hazardous financial condition or financially impaired.
(h) Prohibition on ownership by an insurance company. No risk retention group shall be allowed to do business in this state if an insurance company is directly or indirectly a member or owner of such risk retention group, other than in the case of a risk retention group all of whose members are insurance companies.
(i) Prohibited coverage. The terms of any insurance policy issued by any risk retention group shall not provide, or be construed to provide, coverage prohibited generally by statute of this state or declared unlawful by the highest court of this state whose law applies to such policy.
(j) Delinquency proceedings. A risk retention group not chartered in this state and doing business in this state shall comply with a lawful order issued in a voluntary dissolution proceeding or in a delinquency proceeding commenced by a State Insurance Commissioner if there has been a finding of financial impairment after an examination.
(k) Penalties. A risk retention group that violates any provision of this chapter will be subject to fines and penalties including revocation of its right to do business in this state, applicable to licensed insurers generally.
(l) Operation prior to enactment of this chapter. In addition to complying with the requirements of this section, any risk retention group operating in this state prior to enactment of this chapter shall, within thirty (30) days after the effective date of this chapter, comply with the provision of paragraph (a)(i) of this section.
SECTION 2. Section 83-55-16, Mississippi Code of 1972, is amended as follows:
83-55-16. * * *
(1) Each risk retention group or risk purchasing group which wishes to do or continue to do business in this state shall apply for an annual license on or before March 1 of each year. If a risk retention group or risk purchasing group fails to timely renew its license, the commissioner shall immediately revoke without notice or hearing any registration or license held by the entity.
(2) Each risk retention group or risk purchasing group operating in the State of Mississippi shall file with the Mississippi Department of Insurance on or before March 1 of each year a listing of the premiums written on risks in Mississippi. SECTION 3. This act shall take effect and be in force from and after July 1, 2005.